Time for a Reality Check: How Close Is the Blockchain Revolution in Capital Markets?

Despite the frequent claims that blockchain is a ‘solution looking for a problem’, the past three years have seen nearly all major capital markets firms embarking on some form of blockchain or other distributed ledger technology (DLT) project. And for good reason. According to Accenture, organisational complexity and legacy structures are costing the industry roughly $700 billion annually, including the cost of capital, with many existing processes having remained unchallenged for decades. As a result, a large number of proof of concepts have been launched by leading firms and institutions to explore the potential application of blockchain technology to transform many of these existing systems, not only in terms of front office and trading but also across the full range of post-trade functions. Notable examples include the nine institutions currently collaborating with FX settlement provider CLS and IBM on a trial blockchain project called “Ledger Connect”, while the Depository Trust & Clearing Corporation (DTCC) also expects its credit derivatives Trade Information Warehouse (TIW) to move to a DLT platform in the coming months.

Yet the pace of DLT adoption in the capital markets remains much slower than has been seen in other areas such as trade finance, with the majority of projects currently limited to small scale, in-house PoCs. Given the scope, complexity and systemic importance of the clearing and settlement landscape, is it realistic to expect a blockchain revolution anytime soon? In this article, Nicola Tavendale and Mike O’Hara of The Realization Group speak to Sophia Grami and Mohammed Cherif of Synswap, OBITO’s Stephane Savanah, James Maxfield and Ali Rutherford of Ascendant Strategy and Olaf Ransome from the USC Project, about whether DLT transformation in the post-trade sector is closer than many expect and what industry leaders should be doing to prepare for the change.

Stef scaled
Chief Scientist at OBITO Stephane Savanah
CEO & Co-Founder at Synswap Sophia Grami
Mohammed Cherif
Co-founder at Synswap Mohammed Cherif
Olaf Ransome scaled e1621524204682
USC Project Olaf Ransome
James Maxfield 2
Managing Director at Ascendant Strategy James Maxfield
Alastair Rutherford 3
Managing Director at Ascendant Strategy Alastair Rutherford